When it comes to stocks, it’s easy to have a short memory. Everybody seems focused on what’s happening today and the near future. What are the pundits saying about this week? What are the forecasters predicting for the next quarter? Back in 2020, after the market shook off the shock of the pandemic, it came roaring back and major indexes like the S&P 500 ended the year at record levels. Going into 2021, stocks like Nordstrom and Peloton didn’t just recover, but reached new highs. For [...]

We talk about this all the time: the media has a powerful influence on its audience, and more times than not, what they choose to report on does not line up with what matters most. This disconnect can pose real risk to investors. The chart below is from an article that compares the difference between causes of death in the U.S. to what is most reported in the news1. It’s meant to question whether there is a disconnect between what we see in the news and what is reality. [...]

On its face the strategy of “buying the dip” seems much more measured than merely trying to identify low-cost stocks that are destined to become the next Apple. But it’s still a risky strategy. Just like it sounds, to buy the dip is to purchase stocks that are temporarily undervalued. For example, Pitney Bowes, Paypal, and Meta (formerly Facebook) are all well-known, category-leading companies whose share prices have recently experienced a significant decline. Buying the dip would mean purchasing them at a discount (their current low [...]

Pictures help us make sense of data. For example, when paleontologists unearth a single tooth, they can tell a lot about the animal it came from, including whether or not it’s a new species. When they publish their findings for their peers, they will include pages and pages of data. But when the discovery is announced to the public, it will likely be accompanied by a highly detailed illustration of the animal in its natural setting. The pictured animal is based on the data, but if [...]

One of the favorite tropes of time travel stories—movies, novels, or TV shows—is the prescient investor. This is a character who becomes fabulously wealthy by traveling to the past and buying high performing stocks before they take off. It’s a handy way to create a character with limitless resources, but it also fulfills the fantasy of every speculator: picking exactly the right stock again and again. Knowing what was going to happen in the future, a character could achieve the same result by buying winning lottery [...]